NJ man bilked his fellow Orthodox Jews out of millions

TRENTON — A Lakewood man Thursday admitted that he ran a real estate investment fraud scheme that bilked many of his fellow Orthodox Jews and others out of more than $200 million, U.S. Attorney Paul J. Fishman announced.

Eliyahu Weinstein, 37 — a.k.a “Eli Weinstein,” a.k.a “Edward Weinstein,” a.k.a “Eddie Weinstein” — pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to two counts of the Indictment pending against him: one count of conspiracy to commit wire fraud, and one count of money laundering.

Weinstein’s trial on these charges was scheduled to start Jan. 7.

Weinstein’s co-defendant, Vladimir Siforov, is charged in the Indictment with three counts of wire fraud and remains a fugitive.

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Under the terms of the plea agreement, which Judge Pisano accepted today, Weinstein may be sentenced to up to 25 years in prison and up to three years of supervised release. He must also provide a full accounting of all monies paid to him during the period covered by the Indictment. Weinstein has also agreed to forfeit $2 million in seized property and pay restitution to the victims of his offenses.

Sentencing is scheduled for April 2.

“Weinstein shamelessly exploited investors’ trust, using doctored documents for properties he didn’t own – including in a town that doesn’t exist – and continued to commit crimes while out on bail,” U.S. Attorney Paul Fishman said. “With false promises of sound investments and charitable donations, he stole $200 million, spending freely on fancy cars, jewelry and gambling trips. And in using victims’ money to collect Judaica, Weinstein robbed from his own community’s present to stockpile artifacts of its past.”

From June 2004 through August 2011, Weinstein orchestrated — with the help of Siforov and others – a real estate investment fraud scheme, headquartered in Lakewood, that has resultedin multi-million dollar losses to victim investors.

To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. Weinstein and others told victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy a particular piece of property at a below-market price. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold – or “flipped” – to a third-party purchaser that Weinstein had lined up. Victims were also told that the victims’ money would be held in escrow until the closing of a purported real estate transaction.

Weinstein and others initially targeted victims from the Orthodox Jewish exploiting his standing in, and knowledge of, the customs and practices of this community to further the scheme. This type of illegal activity is commonly referred to as “affinity fraud,” and refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups.

The perpetrators of affinity fraud scams frequently are, or pretend to be, members of the group,and they exploit the trust and friendship that exist in groups of people who have something incommon.

Weinstein abused the Orthodox community’s practice of engaging in transactions based on trust, and without paperwork, to obtain money from his victims without substantial written records. He would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments. Weinstein also used a portion of the fraud’s proceeds to fund “charitable and religious contributions,” which he used to elevate his reputation within the Orthodox Jewish community.

By 2010, Weinstein had tarnished his reputation in the Orthodox Jewish community due to the massive losses caused by his fraud scheme and found it difficult to obtain more money to further the scheme from within the Orthodox Jewish community. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded out of additional millions of dollars.